Petition of Twenty-Four Vermont Utilities

• Decision Date: 02 October 1992
• Docket Number: TWENTY-FOUR,No. 91-154,91-154
• Citation: 159 Vt. 339,618 A.2d 1295
• Court: Vermont Supreme Court
• Parties: , 142 P.U.R.4th 542, Util. L. Rep. P 26,280 In re Petition ofVERMONT UTILITIES, Pursuant to 30 V.S.A. § 248, for a Certificate of Public Good Authorizing Execution and Performance of a Firm Power and Energy Contract with Hydro-Quebec and a Hydro-Quebec Participation Agreement (New England Coalition for Energy Efficiency and the Environment and the Grand Council of the Cree (Quebec), Appellants).

Page 1295

618 A.2d 1295

159 Vt. 339, 142 P.U.R.4th 542, Util. L.

Rep. P 26,280

In re Petition of TWENTY-FOUR VERMONT UTILITIES, Pursuant to

30 V.S.A. § 248, for a Certificate of Public Good

Authorizing Execution and Performance of a Firm Power and

Energy Contract with Hydro-Quebec and a Hydro-Quebec

Participation Agreement (New England Coalition for Energy

Efficiency and the Environment and the Grand Council of the

Cree (Quebec), Appellants).

No. 91-154.

Supreme Court of Vermont.

Oct. 2, 1992.

Reargument Denied Nov. 25, 1992.

Richard H. Cowart, Chair.

John H. Marshall and Holly Ernst Groschner of Downs Rachlin & Martin, St. Johnsbury, for petitioners-appellees.

Bonnie Barnes, William K. Sessions, III, James Allen Dumont, and Chris McAnany, Law Clerk (on the brief), of Sessions, Keiner, Dumont, Barnes & Everitt, Middlebury, for intervenors-appellants.

James Volz, Director for Public Advocacy, and Robert V. Simpson, Jr. and John L. Hodge, Sp. Counsel, Montpelier, for appellee Dept. of Public Service.

Before ALLEN, C.J., GIBSON, DOOLEY and MORSE, JJ., and BRYAN, Superior Judge, Specially Assigned.

DOOLEY, Justice.

On October 12, 1990 and January 7, 1991, the Public Service Board granted petitioners, twenty-four Vermont utilities, interim and then conditional approval, pursuant to 30 V.S.A. § 248, to purchase more than four billion dollars worth of electricity over a thirty-year period from Hydro-Quebec (HQ), a Canadian producer of electricity. The New England Coalition for Energy Efficiency and the Environment (NECEE) and the Grand Council of the Cree (the Cree) intervened before the Board to oppose the purchase, and now appeal the Board's approval. They argue that (1) the Board erred in basing its own detailed analysis of statewide need for the purchase on evidence not properly before it; (2) the Board's finding that the purchase of 340 megawatts of electricity on an annual basis from HQ would not require the construction of new production facilities in Quebec, and therefore would not threaten Vermont wildlife, was clearly erroneous; (3) the Board erred in refusing to allow intervenors to present evidence on the impact of a Canadian agency ruling offered after the close of evidence on the implications of the reliability of HQ as an energy source, while requesting an affidavit from HQ as a condition of its approval; (4) the Board erred in conditionally approving the purchase on the basis of a determination of statewide need, allowing for a subsequent showing of need by the individual utilities; (5) the Board's finding of economic benefit to the state from the purchase failed to account for external economic implications of importing energy, such as the loss of jobs and tax revenue, and therefore was clearly erroneous; and (6) the Board erred in refusing to consider evidence of human rights deprivations of the Cree, a Native American population in Quebec, that would result from HQ's construction of electricity production facilities. We affirm.

I.

On April 1, 1988, all of Vermont's electric utilities (petitioners) signed a participation agreement with HQ under which they would purchase between 340 and 450 megawatts (MW) of firm power annually pursuant to schedules that cover thirty years. ¹ At a minimum, they would begin to purchase 57 MW in November 1990, and the purchase obligation would grow to 340 MW in the year 2000, declining to zero by the year 2020. The minimum purchase component was crafted to replace current contract amounts with HQ that total approximately 323 MW at present and decline over the next few years. At their option, the Vermont utilities could purchase an additional 110 MW. The participation agreement was subject to approval of the Public Service Board under 30 V.S.A. § 248(a)(1)(A) because each of the utilities will purchase "electric capacity or energy from outside the state, for a period exceeding five years, that represents more than one percent of its historic peak demand."

After thirty-four days of evidentiary hearings, the Board approved the minimum purchase amount in the aggregate, subject to a specific showing of need for the amount to be distributed to each utility. There were twelve conditions attached to the approval, including that: (1) all amounts above the minimum be cancelled or the petitioners make a separate showing that the additional purchases will promote the general good of the state and will be supplied by existing HQ facilities; (2) petitioners file an affidavit from HQ stating that HQ is obligated to provide the power under the agreement irrespective of regulatory action on licensing and construction of specific facilities, that any shortfalls in power or energy caused by delay or cancellation of generating facilities would be distributed equitably among all purchasers, and that damage and compensation provisions would apply if the National Energy Board of Canada took certain adverse action; (3) each utility would file within sixty days statements supporting its allocation of power; (4) each utility must "develop and implement measures to acquire all resources available from cost-effective acquisition of energy efficiency"; and (5) each utility must file a statement of efforts to sell back to HQ power and energy not needed in the short term. Overall, the Board found that the HQ contract "will provide a source of economic and reliable power" that would save Vermont ratepayers $500 to $700 million over the life of the contract.

The conditions ordered by the Board are similar to those sought by the Vermont Public Service Department, which urged the Board to approve the basic contract but not the additional 110 megawatts. The Department argued for greater specificity in the utilities' obligation to pursue energy efficiency measures. Before the Board, the main opponents of the purchase were the Cree and NECEE [hereinafter intervenors], and they were joined by the Conservation Law Foundation, Vermont Natural Resources Council and Vermont Public Interest Research Group. Generally, the opponents argued that the purchase did not meet the standards of § 248(b) and thus did not promote the general good of the state. The Cree emphasized the adverse environmental consequences in both Quebec and Vermont, and the effect on their way of life. Many of the opponents argued that the energy needs of the state could be met by demand-side management (DSM)--that is, investments in energy efficiency measures that would reduce demand at a cost less than that of increased supply. They were joined in that position by the Vermont Independent Power Producers Association (VIPPA), who also argued that the state's needs could be met by in-state renewable resources and cogeneration. Only the Cree and NECEE appealed the Board's order. ²

II.

Intervenors first argue that the Board erred in relying on its own technical analysis of the need for the HQ power. The circumstances connected with this argument are somewhat complicated and require a detailed explanation.

To address one of the statutory approval criteria, see 30 V.S.A. § 248(b)(2), the Department of Public Service (DPS) retained Energy Systems Research Group, Inc. (ESRG), to do a detailed analysis of the monetary savings to Vermont ratepayers from the HQ contract, as opposed to alternative sources of supply or demand-side management (DSM) actions. The analysis was based in part on research done by the staff of DPS and a Vermont electric utility dispatch-and-revenue-requirements computer model called "UPLAN." The results of the analysis were contained in a long report which concluded that approximately $134 million in present value (1989 dollars) benefits would accrue to Vermont ratepayers in the form of reduced electric rates from the HQ contract over the period from 1990 to 2018.

ESRG analyzed two levels of demand-side management that they called moderate DSM and strong DSM. Intervenors and others attacked the ESRG report on a number of grounds, but the strongest attack focused on its treatment of DSM. In intervenors' view, more intense DSM would eliminate the need for the HQ contract. Responding in part to that criticism, ESRG did further analysis while the case was progressing and, in rebuttal, presented new conclusions based on an increased level of DSM that would reduce Vermont's peak load by 27% and its energy demand by 20% in the year 2000. ESRG concluded that even at this "intensified" level of DSM (IDSM), the HQ contract would provide significant financial benefits to the ratepayers of Vermont.

During the course of the hearings, a staff member of the Board asked the parties to "hand over any Lotus 1-2-3 worksheets they relied on in analyzing the Hydro Quebec purchase." The main subjects of this request were the worksheets underlying the ESRG analysis. The request led to an on the record discussion between the parties and the Chairman of the Board about the Board's power to make independent computer runs from the programs used by the witnesses. The Chairman took the view that the Board had the power to make such runs but had to rely on record evidence in developing the computer run, and also needed to state explicitly in its findings how the run was made so that "anybody can understand how the conclusion was arrived at." Intervenors did not object to the Board's request or position on computer runs. Following the close of the evidence, a Board staff member wrote DPS specifying the ESRG information the Board wanted and requesting that this information be provided on floppy disks in computer-readable files. The request included ten categories of items. DPS complied with it.

The Board's decision indicates that it did independent analysis based on the ESRG methodology and programs. After first summarizing the results of the ESRG analysis based on "strong" and "intensified" DSM, the Board went on to say in its findings:

In order to test this argument [that higher levels of DSM were feasible and would preclude the...